Ron Carucci spoke with Daniel Kahneman, 2002 Nobel Prize winner and author of Thinking Fast and Slow, to explore why humans are prone to flawed decision making and what we can do about it. Kahneman cites three significant flaws that exist in our choice-making apparatus. First, we have a predisposition to what we like. We tend to have great confidence in things we feel optimistic about, and if we feel positively about a strategy or project, we defend it. But oftentimes the emotion comes first, and the rationale second. We think we are doing something for a reason, but we retrofit the reason after the fact.

Second, we place unfounded trust in over-confident leaders. Confident leaders have a clear advantage over those who display a lack of it, but confidence doesn’t necessarily translate to a track record of effective choices. The problem arises when we follow over-confident leaders, even against our better judgment. Third, we have a tendency to overweight binary choices. Few organizational issues at the strategic level offer only two options, yet we often reduce complexity down to artificial polarities, which can be paralyzing to our decision-making process.

What can leaders do to address these flaws? Start with the assumption that all you see isn’t all there is to see, and you will quickly raise the quality of your most complex decisions. Accepting that we are biased toward certain outcomes forces us to embrace systematic thinking. “Plan decisions in advance. Know which aspects of the problem you are going to evaluate, have criteria for assessing each, and know how you are going to compare options,” Kahneman says.

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